Question

Backdoor Roth IRA and Form 5329, Part IV Line 26

Forum|Forum|1 year ago
March 9, 2025
1 reply
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In Jan. 2024, I had a $0.80 balance in T-IRA and contributed $6999.20 in March to not exceed $7000 in the paper. Later, I made a conversion (transferred) $7000 to R-IRA for a backdoor Roth IRA. After a few days, I earned $3.81 interest in T-IRA, so, I made the additional conversion of $3.81 to R-IRA to make T-IRA $0.

When I received the 1099-R for my T-IRA, the Gross distribution and Taxable amount showed $7003.93 instead of $6999.02, which is the amount I really contributed in 2024. The extra $3.93 seems to be coming from the interest while I was in the T-IRA for a few days.

With this information, I followed step by step guide to correctly file backdoor roth IRA contribution (which I did not have any issues for several years), but this time, I'm asked to input following question.
"IRA Contributions Worksheet: LIne 26 - Taxpayer's excess Roth IRA contribution credit should be equal to $1.00, the Roth IRA contribution credit from Form 5329, Part IV. Xs Roth IRA cont cred (T):___"

My TT info shows that I have $7004 in 1099-R and $6999 in Traditional and Roth IRA Contribution (I entered total 2024 traditional IRA contribution as $6999, because it is the amount I contributed in 2024, without any gained interest).

I'm not sure what I need to do here. Should I just input "1" in that section and will resolve all the issues without penalties?

A

AnnetteB6

It seems that you have possibly entered both a Traditional IRA contribution and a Roth IRA contribution as part of your return. You should enter the Traditional IRA contribution, because you did contribute to that account. However, converting the Traditional IRA to a Roth IRA is not considered to be a Roth IRA contribution and should not be entered as part of your return in the contributions section.

Entering the Form 1099-R reporting the distribution from the Traditional IRA and answering the question about converting the money to a Roth IRA is all you do with regard to the Roth. There should not be any Roth excess penalty imposed.

Take a look at the following TurboTax help article for the steps used to report a backdoor Roth IRA conversion and make sure that this is all that you have entered:

How do I enter a backdoor Roth IRA conversion?

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